1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
777dan777 [17]
3 years ago
5

OceanGate sells external hard drives for $260 each. Its total fixed costs are $30 million, and its variable costs per unit are $

210. The corporate tax rate is 30%. If the economy is strong, the firm will sell 2 million drives, but if there is a recession, it will sell only half as many.
a.
What is the firms' degree of operating leverage (defined as the ratio of the percent change in EBIT to the percent change in sales)?



Degree of operating leverage


b.
If the economy enters a recession, what will be the firm’s after-tax profit? (Enter your answer in millions.)



After-tax profit $ million
Business
1 answer:
Svetach [21]3 years ago
7 0

Answer:

a. in order to calculate this we must assume that the economy entered a recession:

degree of operating leverage = [($20 - $70)/$70] / [($260 - $520)/$520] = -0.7143 / -0.5 = 1.43

b. $14 million

Explanation:

strong economy:

total sales $520 million

<u>variable costs $420 million</u>

gross profit $100 million

<u>fixed costs $30 million</u>

EBIT $70 million

<u>income taxes $21 million</u>

net income $49 million

weak economy:

total sales $260 million

<u>variable costs $210 million</u>

gross profit $50 million

<u>fixed costs $30 million</u>

EBIT $20 million

<u>income taxes $6 million</u>

net income $14 million

You might be interested in
William pays his $500 premium every 6 months for automobile insurance with collision coverage. His deductible is $750. William c
snow_lady [41]

William will pay a total of $750 out of pocket for both cars to be fixed.

The other car is covered by the property damage portion of his insurance, so it is covered 100% by the insurance company and there is no deductible or amount that William needs to pay. William’s car will be covered by the collision portion of his insurance. He is responsible for paying the $750 deductible and the insurance company will pay the remaining $50.

3 0
3 years ago
A salesman at a music store always begins by showing his customers high-priced instruments. When the customers refuse these, the
quester [9]

Answer: Rejection-then-retreat approach.

Explanation: The musical equipment salesman is using the Rejection-then-retreat approach to sell his musical items. This method is used to frighten the customers with higher priced items then make them settle for lesser priced items.

4 0
3 years ago
Read 2 more answers
Geraldo is a vice president at Magnolis Inc. He, along with a few other individuals in his rank, is responsible for setting the
jok3333 [9.3K]

Answer: Top management

Explanation: There are several stages of management in a company to most important of them is the top management. The decisions by top managers affect the organisation as a whole and the success and failures of the  organisation highly depends on their actions. Examples of top management are directors and vice president .

In the above case, Geraldo is the vice president of the company and also he is responsible for determining the directions of operations of the company thus we can consider him in the top management.

7 0
3 years ago
True or False<br><br> To raise money, a partnership can sell stock.
nataly862011 [7]

Answer:

The answer is false. Partnerships can not sell stocks. They even can not issue shares to finance Thier requirements.

Only the public listed corporations can trade stocks and sell them to the open public in a registered stock exchange.

Explanation:

3 0
3 years ago
A study was done on the campus of a major state institution to measure attitudes of students to-wards the recent fee increase. O
kiruha [24]

Answer: Ordinal scale.

Explanation:Ordinal scale is the level of measurement that gives the ranking of data without showing the degree of variation between them. It helps in identifying if object has more or less characteristic when compared to another object but does not tell the exact weight of the characteristic. Data in Ordinal scale is usually given in order of magnitude since there is no standard of measurement of differences. For example 1=most willing to 5=least willing.

3 0
3 years ago
Other questions:
  • "Snoop Company sells collectibles. The following information summarizes Snoop Company's operating activities for the most recent
    7·1 answer
  • The law creates the foundation for ethical behavior.<br><br><br> True<br><br><br> False
    7·1 answer
  • After firm A acquired firm B, it raised the prices for the goods produced by both firms. This can increase profits if those good
    10·1 answer
  • WHY should families use active listening strategies?
    10·2 answers
  • Think of the products you use on a daily basis and think of the types of utility. What is a product that you use on a daily basi
    6·1 answer
  • Listed below are several transactions. For each transaction, indicate whether the cash effect of each transaction is reported in
    14·1 answer
  • Everything that consumers evaluate when deciding whether to buy a good or service is called the
    15·1 answer
  • A firm purchases goods on credit worth $90. The same firm pays off $100 in old credit purchases.
    8·1 answer
  • The price of a ranchette estate is $260,000. The bank requires a 15% down payment and 3 points at the time of closing. The cost
    10·1 answer
  • At the beginning of January of the current year, Thomas Law Center's ledger reflected a normal balance of $55,000 for accounts r
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!